Discover wealth-building through property investment and ways to boost your net return by saving on costs.
NAB cuts home loan interest rates, ANZ raises
22 May, 2020
30 Apr, 2020
A guide to hosting your property on Airbnb
16 Aug, 2019
There are many steps involved in starting to invest in property, but one key step you can’t overlook is planning. Property investment is a huge financial commitment, and your portfolio should be something that will make you wealthy down the line, so take the time to properly research the house you’re buying.
Consider consulting a financial adviser or mortgage broker if you need help getting started in property investing.
Below are some low variable rate home loans for property investors this month.
Product Features
Monthly repayments: $1,476
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Base criteria of: a $400,000 loan amount, variable, principal and interest (P&I) investment home loans with an LVR (loan-to-value) ratio of at least 80%. If products listed have an LVR <80%, they will be clearly identified in the product name along with the specific LVR. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term.
If you’re buying an investment property, the house versus apartment versus townhouse question is quite different. It comes down to your overall investment strategy and your goals. When you’re considering purchasing a property as an investment, rental income and capital growth are the two key things to keep top of mind.
As a general rule, houses tend to generate better long-term capital growth, while apartments tend to generate better rental returns. However, much of this is dependent on the state of the property market and the economy.
If you already own a house, investment or otherwise, you can use the equity in your first property to buy a second property. By building up substantial equity, you can then refinance your home loan to put down a deposit on a second property. You could do this multiple times over the years to build a strong property portfolio.
Landlord insurance is a type of insurance policy specifically designed to protect those who own investment properties from the risks that come with renting it out. It generally covers events that cause a loss of rental income, theft or damage to your property.
There is no one set premium for landlord insurance policies. The cost of a policy is determined by a very broad range of factors like:
Airbnb is a community-driven and moderated marketplace where hosts advertise their spare space to potential short-term renters.
With over nine million spare bedrooms in Australia (according to the last census) and the cost of home ownership only going up, it makes good financial cents (see what we did there) to use your home to pay down your mortgage sooner and pocket the savings.
It’s free to list your space on Airbnb, but Airbnb charges a 3% host service fee which is deducted from the booking subtotal (it can go up to 5% if you’ve got a strict cancellation policy).
Airbnb will send hosts their money, via the payment option selected, 24 hours after check-in time.
There’s no one ‘best’ home loan for investment properties – there are hundreds of home loan products available for investors right now. But generally, a good home loan for an investment property should have:
An investment home loan is a home loan for people looking to buy a property with the intention of renting it out and profiting through a rise in the property’s value. Home loans for investment property are different from the home loans you might use to buy a house or unit to live in – those are known as ‘owner-occupier’ home loans.
Investment home loans tend to come with higher interest rates – this is partly because property investors are generally considered to be riskier borrowers than owner-occupiers. It’s also because APRA (The Australian Prudential Regulation Authority) recently had a growth cap imposed on the amount of investment lending that ADIs (Authorised Deposit-taking Institutions) could conduct, however, this cap was lifted in July 2018.
But if you spend the time to do some research – and you should if you’re taking out a home loan – you’ll see that there are still home loans out there for investors with rates below 4%.
Our home loan repayment calculator shows that the difference between a 4% and a 5% interest rate on a $500,000 home loan is over $300 per month and $100,000 over 30 years. That difference speaks for itself really.
Just like a regular home loan, investment loans can sting you with fees if you aren’t careful. These fees can be anything like:
Keep in mind that upfront and ongoing fees are factored into a loan’s comparison rate, which every law-abiding lender must display beside the advertised rates of their products. So if you see a loan with a low advertised interest rate, but a relatively high comparison rate, it probably has high fees to make up for the lower interest rate.
Interest-only home loans are great for investors who plan to profit by selling their properties within the IO period (eg. after making a capital gain) because it reduces their expenses (and relative cash outflows). Nevertheless, it pays to be aware of the benefits and disadvantages of this type of mortgage.
The Australian Taxation Office (ATO) lists several investment expenses that investors can claim a tax deduction on, such as:
You should speak to a registered tax agent about the tax implications of buying an investment property.
The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:
Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.
In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.
*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.
NAB cuts home loan interest rates, ANZ raises
22 May, 2020
30 Apr, 2020
A guide to hosting your property on Airbnb
16 Aug, 2019
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